Investment Chart Kondratiev Wave

Investment Chart Kondratiev Wave

Saturday, 28 January 2012

New US leading indicators: 2% economic growth and slowing of growth industrial production

From time to time it is time to trash the old leading indicators and adjust them to what the spirit of the age thinks is better. There were serious complaints about money growth as leading indicators and credit indicators were sorrowfully missed. So they have shaken old with new leading variables and a new set has seen the light.
That new set shows the leading indicators are suddenly at a much lower level than before (see chart of Strategas).
The new set leading indicators explained economic growth two quarters ahead was still not that good. I made two charts for the relation between the new leading indicators and economic growth respectively growth of the industrial production. Since 1995 32% of the fluctuations of the economic growth could be explained and 52% of the changes of the growth of the industrial production.
There are periods in which the leading indicator structurally indiacato too much or too little economic growth.
At the moment the new leading indicators seem to point to economic growth of 2% in the US (but growth was recently lower than the leading indicators indicated) and also a fall back in the growth of the industrial production seems in the offing.

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